A significant trade agreement between the United Kingdom and the United States has been signed off by President Donald Trump, marking a crucial step in easing long-standing tariff disputes between the two nations. The deal, which reduces tariffs on UK cars being shipped to the US, is expected to shield British businesses from the impact of Trump’s tariffs. Prime Minister Sir Keir Starmer described the move as a “very important day” for both countries.
The agreement outlines several key provisions, including a reduction of the 27.5% tariff on UK-made cars to 10% for up to 100,000 vehicles annually. Additionally, tariffs on UK steel and aluminum exports to the US have been eliminated, providing relief to the UK’s manufacturing sector. The deal also removes US duties on Rolls-Royce components and includes a $10 billion Boeing aircraft order from a UK airline.
The automotive sector is expected to benefit significantly from the tariff reduction. Mike Hawes, head of the Society of Motor Manufacturers and Traders, said it was “a huge reassurance” to the sector, adding that the 10% tariff gives UK manufacturers “something of a competitive edge” over competitors from Italy and Germany, which are still subject to the 27.5% tariff. However, the deal’s limitations have sparked criticism, with Conservative party leader Kemi Badenoch calling it a “tiny tariff deal”.
The steel industry has also welcomed the agreement, but Gareth Stace, head of trade body UK Steel, emphasized the need for clarification on the “melted and poured” requirement and the level of quotas available to UK steelmakers. The UK government has stated it will “continue to go further and make progress towards 0% tariffs on core steel products as agreed”.
The UK has granted a tariff-free quota of 1.4 billion liters of US ethanol, while the US will scrap a 20% tariff on US beef imports and raise the quota to 13,000 tonnes. However, ABF Sugar, which owns the largest bioethanol plant in the UK, has warned it could be forced to make redundancies if the British market is not protected. “A lot is at stake here, not just in the short-term but the long-term,” said ABF Sugar chief executive Paul Kenward.
The deal will come into effect seven days following its official publication. While ministers have hailed the US deal alongside trade agreements with the European Union and India, the pact has drawn criticism for its limited scope. Trump has previously declared the pact on tariffs is a “major trade deal”, but it is not a free-trade agreement, as the US president does not have the authority to sign such deals without Congressional approval.